Courthouse News

A Chicago realtor and philanthropist did not prove that the city strategically zoned wealthy, predominately white neighborhoods to promote segregation, the Seventh Circuit ruled.

     "Chicago is, by its own admission, a 'highly segregated city' and has been for more than 50 years," Chief Judge Diane Wood wrote for the three-judge panel Monday.

     Since 1980, whites have lived mostly on the north, northwest, southwest and far south sides of Chicago, while blacks have lived mostly on the west and south sides, census records show.

     Trends like those led Albert Hanna — a realtor, philanthropist and long-time resident of Lincoln Park, an affluent North Side neighborhood — to sue the city in 2011.

     Hanna alleges that Chicago snagged more than $1 billion in federal housing funds by lying to the federal government about its housing policies from 2005 to 2011.

     The city actually increased segregation by administering its funding programs, along with its zoning and land use laws, to place affordable housing in less desirable areas, Hanna claims.

     Those "low-opportunity areas," with over 40 percent of residents living below the federal poverty line, have mostly minority populations, the lawsuit states.

     The city's "areas of opportunity," however, — with "lower poverty rates, good community services and commercial amenities, job opportunities, safe neighborhoods and good schools" — have more whites than blacks and Latinos, compared to Chicago in general, Hanna claims.

     Chicago allegedly used "aldermanic privilege" and "down-zoning" of 5,200 acres of mostly desirable land to prevent or limit new construction of affordable housing.

     But in the 1960s to 1980s, when most projects were not controlled by the city, roughly half of affordable rental housing was located in well-to-do areas, according to Hanna's complaint.

     That statistic allegedly dropped to just 10 percent in the '90s after the city council took over.

     Indeed, 93 percent of the more than 2,600 affordable housing units built from 2005 to 2011 are located in low-income areas, according to the complaint.

     Hanna says that in 2004, then-Mayor Richard Daley's zoning ordinance's stated purpose — to "preserve neighborhood character" — was a smokescreen.

     A federal judge dismissed the amended complaint, and Hanna appealed.

     But the Seventh Circuit affirmed the lower court's ruling Monday, finding that Hanna's complaint gives no information about which regulatory provisions the city allegedly violated.

     "The city has a point," Judge Wood wrote. "Where the allegedly false certification relates to a failure to comply with certain statutory and regulatory provisions, the plaintiff should be able to tell the city which ones it flouted, and how and when."

     This lack of specificity makes it "nearly impossible for the defendant to prepare a defense," according to the ruling.

     Hanna also failed to specify the time, place, and method of the alleged falsification, the ruling states.

     "Beyond the fact that the certifications were made yearly, 'typically in December,' Hanna says nothing more about timing," Wood wrote. "Nor does he allege the place, either the physical location or the specific documents."

     The judge later added that "the documents in question are probably publicly accessible. This may be the real problem with Hanna's case: the [False Claims Act] is meant to encourage whistleblowing by insiders, and Hanna seems to have no insider knowledge."

     Judges Richard Posner and Ilana Rovner rounded out the unanimous panel.

     One of Hanna's attorneys, Michael Allen with Relman, Dane & Colfax in D.C., declined to comment on the ruling.